PropertyGuru Malaysia released its PropertyGuru Malaysia Property Market Report (MPMR) Q2 2023, which revealed that property demand and supply eased at the beginning of the year with an overcast economic outlook.
Based on the insights from DataSense, PropertyGuru’s market data and analytics platform, the report captured downward trends in the Sale Demand Index, with property enquiries decreasing by 5.6% QoQ. While inflation is projected to moderate in the coming months, global economic uncertainties have affected the appetite of Malaysian buyers for big-ticket purchases. Similarly, the Sale Supply Index saw a slight decrease of 0.6% as property owners continued the wait-and-see approach towards their investments.
Sheldon Fernandez, Country Manager, Malaysia (PropertyGuru.com.my and iProperty.com.my), shared, “With Bank Negara Malaysia’s decision to raise the Overnight Policy Rate by 25 basis points to 3%, it will be difficult to see an uptick in property demand. Potential homebuyers are likely to delay their purchasing plans because of the higher borrowing costs and rising cost of living. Currently, it is still too early to gauge how much impact this will have on the market.”
Asking Price Continues to Rise
The MPMR Q2 2023’s Sale Price Index tracked the asking prices of properties listed on propertyguru.com.my, which increased by 1.6% QoQ in Q1 2023. Sellers are likely not keen to lower prices against the backdrop of an uncertain economic climate. The global increase in construction costs paired with recent labour shortages have also pressured developers to hike their prices to cover the increased costs.
While Malaysia is projected to see a moderately lower economic growth this year, we may see a more attractive property market as economic activities accelerate towards the second half of the year. Following the boost in investments from companies like Tesla and AWS, as well as China’s RM 170 Billion Investment Commitment, this is likely to spur job creation and push infrastructure development in Malaysia in the near future.
However, buyers are also aware of the external pressures caused by global inflation and remain cautious with their purchasing decisions, especially with the current higher borrowing costs. If property prices continue to peak with demand lagging, a global recession or economic shock could lead to a price correction. If it happens, property prices adjust accordingly to reflect the slower demand.
Trends in the Rental Market
From the report, the indexes in the rental market mirrored the trends in the property sale market, tracking a decrease in the Rental Demand Index by 6.3%. This is likely due to the substantial increase in rental prices, with the Rental Price Index rising by 4.7% QoQ. The rise in rental prices did not go unnoticed, and the Selangor state government has announced plans to look into the feasibility of expanding its Smart Rental Scheme to low-cost housing.
“The decrease in rental demand, as highlighted in our report, could reflect that Malaysians are becoming even more cautious, perhaps opting to stay with family members and commute to the city to work instead of renting their own place. Again, the wait-and-see approach continues but it may be further exacerbated by the uncertainties ahead,” states Sheldon.
As rental prices continue to rise, we are seeing increased pressure on the demand for affordable housing near job centres. More individuals are migrating towards these urban areas for convenience, but the rising prices may force them to forgo ideal living conditions. This presents a unique opportunity for developers and landlords to consider repurposing their unsold properties into co-living spaces, which offers more affordable living space by sharing costs and common areas with other residents without completely forgoing privacy.
“We are seeing cumulative issues of housing affordability, higher cost of investment, mismatch of demand and supply, and “sick” housing projects. These issues have been persistent in the local market, and unfortunately remain unsolved today. While we do see the government taking the first steps to address these issues, developers must also play their part in assessing what homebuyers need – because that’s changed overtime”, he adds.
Johor in the spotlight
To kick-start 2023, Johor takes the crown for the most-viewed residential properties in Q1 2023. The state boasts the top four most viewed condominium projects in Malaysia and had four other projects front-running in the landed properties category, with Leisure Farm maintaining its top position as the most viewed residential landed project. In the rental market, R&F Princess Cove became a popular project for those looking to rent, given its strategic location near the Johor Causeway.
Johor’s development surge is anticipated to persist, fueled by last year’s RM51.1 billion investment in data centres. As a burgeoning digital hub, Johor is attracting attention to its real estate market. The prospect of new job opportunities may entice more Malaysians to relocate to the peninsula’s southern region.
“Overall in Malaysia, the rising prices driven by global uncertainties will continue to contribute to the current housing affordability issue. As property ownership costs are expected to increase with the OPR hikes, we foresee property buyers and sellers alike will continue to navigate a challenging and unpredictable property market. However, we are cautiously optimistic that the economy will show improvement in the second half of 2023, and we will continue to look out for more positive signs of growth in the residential property market,” he concluded.
About PropertyGuru Malaysia
PropertyGuru.com.my is Malaysia’s leading property marketplace and has been guiding Malaysians in navigating their home-ownership journey since 2011. The company provides easy-to-use, property market data and actionable insights such as Property Guides, Property Market Reports and Home Loan Calculator, which enable property seekers to make confident property decisions wherever they are in their property journey. PropertyGuru Malaysia offers end-to-end solutions for Malaysian property agents (AgentNet) and developers to help achieve their business goals. These include, a high-quality developer sales enablement platform, FastKey; and a host of other property offerings including Awards, events and publications across Asia. The company is part of PropertyGuru Group (NYSE: PGRU), Southeast Asia’s leading property technology company.
